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British Savings Bonds, which were unveiled in the spring Budget, have gone on sale. However, finance experts pointed out that the 4.15% rate on offer with the three-year products sits below the top deals available in the wider savings market, meaning the products “risk disappearing without a trace”. British Savings Bonds are new three-year fixed-rate issues of Treasury-backed savings giant NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds. The Guaranteed Growth Bond option is available at 4.15% gross/AER (annual equivalent rate) and the Guaranteed Income Bond option is at a rate of 4.07% gross/4.15% AER. They offer savers a guaranteed interest rate fixed over three years for investments between £500 and £1 million. Money cannot be withdrawn until the end of the term. NS&I said the intention is for the new British Savings Bonds to be available for an extended period of time. They are available to buy online at nsandi.com. As it stands, savers can get an account that pays more than 5% on either an easy access account or fixed-rate bond Rachel Springall, Moneyfactscompare.co.uk As with NS&I savings generally, the money invested has 100% security, backed by Treasury , and is invested back into supporting the
UK through Government financing. Savers looking for a three-year deal can find a range of options with rates above 4.60% AER in the wider market, according to Moneyfactscompare.co.uk. Higher rates are available on shorter-term bonds; for example, savers can get 5.25% AER for a one-year deal or 5.10% for a two-year deal. Vaping may increase the risk of heart failure, study suggests Foreign Secretary to urge
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Women in culture Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said the NS&I bonds “may well appeal to savers who are happy to forgo higher interest rates available elsewhere on equivalent term bonds to invest their cash, as NS&I products provide 100% capital security. “Popular products don’t tend to sit on the shelf for very long, but NS&I intend to offer these British Savings Bonds for an extended period of time.” She continued: “As it stands, savers can get an account that pays more than 5% on either an easy access account or fixed-rate bond. As has been evident, fixed rates on savings accounts are coming down, so the deals that sit towards the top of the market will likely be in high demand.” Despite being branded as 'British Savings Bonds' the money will go into the general Government coffers, in the same way as other money raised by NS&I Laura Suter, AJ Bell Laura Suter, director of personal finance at AJ Bell, described the bonds as a “middle-market offering” and “a fancy bit of marketing”. She said: “Despite being branded as ‘British Savings Bonds’ the money will go into the general Government coffers, in the same way as other money raised by NS&I.” Ms Suter added: “This new launch effectively kills off the Green Savings Bond – which is the other three-year fixed-rate bond from NS&I. “The account funnels money into environmentally-friendly projects funded by the Government, but it is only paying 2.95% interest. That means you’d have to be very passionate about green initiatives to opt for the Green Bond over the new British Savings Bond.” Sarah Coles, head of personal finance, Hargreaves Lansdown, described the rates on the new bonds as “disappointing”. She said: “NS&I British Savings Bonds may well be doomed to mid-table mediocrity… “At this rate, these bonds risk disappearing without a trace.” Right now, with banks competing so hard for Isa cash, you could even get cashback into the bargain Sarah Coles, Hargreaves Lansdown Ms Coles continued: These NS&I rates just aren’t special enough to persuade swathes of new savers to tie their money up for longer. “Easy access and short-term fixed accounts offer higher rates right now, because longer fixes factor in expectations that interest rates will fall during the term. However, at the moment, there are decent rates available on longer fixes that are worth considering. “There are still three-year savings accounts on the market paying 4.65% or more, and you can get cash Isas over three years paying up to 4.4%, which have the added attraction of protecting your savings from tax. “Right now, with banks competing so hard for Isa cash, you could even get cashback into the bargain, so there are plenty of more attractive homes for your money. “There will be some interest in these bonds. The fact you can hold up to £1 million will appeal to those with huge savings balances, because this is 100% guaranteed by the Treasury, so savers can hold it all in one place without having to worry about the fact that the (Financial Services Compensation Scheme) protections are limited to the first £85,000 with any institution.” British Savings Bonds are there to help people save for the longer term and support their savings goals Dax Harkins, NS&I Bim Afolami, Economic Secretary to the Treasury, said: “This is a new opportunity for UK savers to benefit from the three-year fixed-rate British Savings Bonds knowing that their money is fully protected by HM Treasury. “The bonds will help to grow the savings culture in the UK while providing cost-effective financing for the Government.” NS&I chief executive Dax Harkins said: “British Savings Bonds are there to help people save for the longer term and support their savings goals, safe in the knowledge that their investments are 100% protected. As with all savings with NS&I, money is invested back into supporting the UK through Government financing.” MORE ABOUT